Where's The Sacrifice?

May 21, 2006|The Sacramento Bee

The Republican majority in Congress wants to go into the November elections bragging that they've cut taxes again. The House and Senate extended record-high Bush tax cuts until 2010. They call it a political victory.

Will the American people really buy this one-note chant again?

At a time of war, these members of Congress are demanding sacrifice only of the young people fighting in Iraq and Afghanistan. The tax cuts of 2001, 2002 and 2003 have given us record-high deficits and debt, driving this country into a financial mess political leaders are passing on to future generations.

The tax cutters rely on two fallacious arguments.

The first is the "starve the beast" idea. Tax cuts, the theory goes, will reduce government revenues and choke off government spending, making government smaller. Even conservative economists now reject that hypothesis. Economists William Niskanen and Peter Van Doren of the Cato Institute show convincingly that since 1981, for each 1 percentage point decline in tax revenues, federal spending increases by about one-half percent of GDP.

At least "starve the beast" proponents were honest in saying that tax cuts would reduce government revenues.

Today you have members of Congress actually saying the opposite: "Lower tax rates equal more federal revenue."

The facts show otherwise. Bush tax cuts have contributed to revenues dropping in 2004 to the lowest level as a share of the U.S. economy since 1950. Where revenues typically have been 17 percent to 20 percent of the economy, in 2004 they were 16.3 percent, according to the Congressional Budget Office.

A CBO report shows that a 10 percent cut in income tax rates lowers revenues by $775 billion over 10 years.

So when tax-cut proponents say that tax cuts benefit the Treasury, take it with a grain of salt.

The tax-cut vote was a party-line vote. Voters know whom to blame for the nation's financial mess come November.